Financial Planning -> Stocks, Bonds etc. -> Investment Returns
The Canadian Consumer Price Index has been quite stable since 1992. In the 30 years from 1963 to 1992, the average annual increase (inflation rate) was 5.7%. During that time, there were 5 years where the inflation rate was over 10%, including 1981, when the rate was 12.4%. 1981 is also the year when Canadian 5 year mortgage rates were over 21% for a couple of months. The average 5 year mortgage rate from 1963 to 1992 was 11.03%.
Value is the value at the end of the
period, of $1,000 Cdn invested at the beginning of the period.
The column for returns since December 31, 1979 reflects the earliest data we have for the Nikkei 225 Index.
* Note that the average annual return on bonds is the average yield if the bonds are held to maturity.
(1) For Emerging Markets, the earliest data that we have is December 31, 1987. The average annual return in Canadian dollars for emerging markets for the 31 years from 1987 to 2018 is 10.5%. $1,000 invested at the end of 1987 would have a value of $22,248 Canadian at the end of 2018.
(2) The Nikkei 225 Total Return Index (TRI) year end factors in yen are used with the permission of Nikkei Inc. to calculate the above results. Recent Nikkei year end factors are available on the Nikkei website. The earliest data that we have is December 1979, when the Nikkei 225 TRI was started. The average annual return in yen for the Nikkei 225 TRI for the 39 years from 1979 to 2018 is 4.1%. 1,000 yen invested at the end of 1979 would have a value of 4,836 yen at the end of 2018.
(3) Some of the earlier S&P/TSX Composite Index Total Return data is from Libra Investment Management Inc., sourced from the Canadian Institute of Actuaries. Data for recent years is available from Yahoo Finance.
(4) The above table has now been updated with the Canadian Consumer Price Index from December 2018.
Exchange Rate and Above Returns
The change in the Canadian dollar has a significant effect on some of the above results. As an example, see the following 1 year results in US$:
The 2018 1 year return for the Nikkei 225 TRI © Nikkei Inc. in yen is -10.3%.
Your Investment Returns
If you have brokerage statements which show your return for the past year for US$ accounts, please note that this will be the return on the US$ amounts, not the return when your investments are converted to Canadian dollars. You can use our Investment Return Calculator to calculate your return in Cdn$, by converting the beginning balance, deposits and withdrawals, and ending balance to Cdn$ using the exchange rate in effect on each of those dates.
Other sources of data used to calculate the above returns:
of Canada Rates and Statistics - Interest Rates for T-bills and bonds, Standard
& Poor's, Statistics
Canada Consumer Price Index, Yahoo, Morgan Stanley, UBC
Pacific Exchange Rate Service.
The above table shows before-tax returns. The big difference between the returns on the S&P 500 and bonds or T-bills becomes even bigger after tax. The interest is 100% taxable every year. Most of the return on the S&P 500 stocks would be capital gains, which is only 50% taxable, and is not taxable until the investment is sold. The dividends from the S&P/TSX index stocks are normally eligible for the enhanced dividend tax credit for Canadian stocks, which results in a very low tax rate. See our article on tax treatment of income from different types of investments.
See our Investment Income Tax Calculator which shows the big difference in taxes payable on different types of investment income
See our article on recommended stocks for registered or non-registered accounts - these suggested portfolios are good for novice investors.
Tip: Calculate your own investment returns using our Investment Return Calculator.
Revised: April 16, 2019
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